april 23, 2012 matt kirchner · present • ppt • video • cad • gtm • website propose •...

Matt Kirchner

April 23, 2012

Profit 360, LLC Whitefish Bay, WI

An Awesome Business Speech ü Entertaining ü Take Home Value ü Audience Participation

ü Real Objective Evidence

ü  Specifics not Platitudes

ü  Tons of Information ü  Something for

Everyone

A Bus-Free Presentation

ECONOMY2

Price / Performance Ratio

In economics and engineering, the price/performance ratio refers to

A product's ability to deliver performance, of any sort, for

its price.

But……..Retains 10 Hours of Battery Life

CPU 2X Faster

HDMI Video Out Cable

Front & Back Cameras

Graphics 9X Faster 1/3 Thinner! (Thinner than iPhone 4)

$829

Gyroscope

But……..Retains 10 Hours of Battery Life

Supports Lighting Fast 4G ITE Networks

44% more Color Saturation

Four Times More Pixels than the iPad II

Still $829

5 Megapixel iSight Camera

•  3.146 billion email accounts worldwide

•  112 emails are sent and received each day by the average corporate user

•  555 million websites at the end of 2011

•  2.1 billion Worldwide Internet Users

Royal Pingdom 2012

Economy2 – Impact

•  271.1 million Internet Users North America

•  485 million Internet Users in China

•  250 million tweets are sent every day

•  225 million Twitter Accounts

•  18.1 million people follow Lady Gaga on Twitter

•  8,868 Tweets send per SECOND in in August during the MTV Video Music Awards.

•  800+ million Facebook Users at the end of 2011

Economy2 – Impact

Royal Pingdom 2012

•  100 billion photos on Facebook by mid-2011

•  51 million registered users on Flickr

•  4.5 million photos uploaded to Flickr daily

•  1 trillion YouTube video playbacks in 2011

•  140 YouTube video playbacks per person on Earth

•  48 hours of video are uploaded to YouTube every minute.

Economy2 – Impact

Royal Pingdom 2012

“In a given year 90% of the revenue Intel gets in December comes from

products that weren’t on the market in January.”

-Paul Otellini, CEO, Intel

Economy2 – Impact

Economy2 – The Future In 5 Years

•  Sensors - Real Time Picture of Environment

•  Battery Technology – Devices last 10X Longer

•  Reuse Computer Heat

•  Rush Hour Eliminated

•  3D Holograms of your Friends

IBM

We are in a long period of increasing prosperity as

more and more segments of the economy enter the

“EXPONENTIAL ECONOMY”

So What?

You Have 2 Choices

Economy2

Bankers, board members, employees, investors,

owners, & executives have real time access to our profit

data

Economy2 Rule #1

Profitability (“Performance”)

Is a Result

Performance is not a goal in itself, it’s the result of doing

the right things

E2 Do List

Your Customers will Shop you for Features, Benefits, Quality,

Service & Price

Economy2 Rule #12

Instant Alternatives 1.   Customers Have Instantaneous Access

to: A.   Your Competitors B.   Alternatives to Your Product C.   Pricing

2.   Once they Have These Three they Will Attempt to Turn you Into a………..

Compare with Other Sites

Strategies

q  Expedia q  Kayak

q Orbitz q  Hilton

Appliance World

Create a Strategy To Deal with Customer Information Access – optimize pricing

model & define value proposition

E2 Do List

The Seller Retains the Power to Price Strategically

Economy2 Rule #43

The Economist

q  Economist.com subscription – US $59.00 One-year subscription Includes online access to all articles from The Economist since 1997

q  Print subscription – US $125.00 One-year subscription to the print edition of The Economist.

q  Print & web subscription – US $125.00 One-year subscription to the print edition of the Economist and online access to all articles from The Economist since 1997

The Economist

# Students

q  Internet-only subscription for $59.00 16

q Print Only subscription $125.00 0

q Print & Internet subscription $125.00 84

The Economist

# Students

q  Internet-only subscription for $59.00 16 68

q Print Only subscription $125.00 0

q Print & Internet subscription $125.00 84 32

$0.15 $0.01

q First Test

q Lindt Truffles $0.15

q Hershey’s Kiss $0.01

q First Test

q Lindt Truffles $0.15 73%

q Hershey’s Kiss $0.01 27%

$0.14 FREE!

q First Test



q Second Test

q Lindt Truffles $0.14

q Hershey’s Kiss FREE!

q First Test



q Second Test


q Hershey’s Kiss FREE! 69%

What About You?

$7 FREE!

Adopt an Irrational Pricing Strategy

E2 Do List

Customers in crisis judge your PRICE relative to the size of

their PROBLEM, not the scope of your work.

Economy2 Rule #3

Economy2 Rule #3

• What “Customer Emergencies” do we solve?

• Where can we find more customers with the same problem?

• Not an Invitation to Gouge • More Margin •  Look like a Superstar

Solve Your Customer’s Crisis to protect your

margin

E2 Do List

Customers pay you peanuts for what you DO

Economy2 Rule #19

Invoice Repair Squeaky Floor $75 Total Due $75

Invoice Pound One Nail $1 Knowing Where to Pound Nail $74 Total Due $75

Do

Transportation

Process Claims

Debits / Credits

Tax Return Preparation

Manufacturing

Know

Logistics

Risk Management

Financial Consulting

Tax Avoidance

Supply Chain Optimization

Unhinge what you KNOW from what you DO and

charge separately

E2 Do List

We have SOOO much data it's now more important than ever to measure and focus on the right

stuff

Economy2 Rule #21

The Success of Your Organization Comes Down to 5

Key Items

Example of Measure 5 Things

"Five is eminently a spherical and circular number because in every multiplication it restores itself,

and is found terminating the number; it is change of quality, because it changes what has three dimensions into the sameness of a sphere by

moving circularly and producing light, and hence light is referred to as the number 5.”

Pythagoras (560BC – 480BC)

2

3

5 4

1

Area Tasks Monthly $ Owner Status Revenue • Close Cust . A

• Service Agmts. +$10,000 +$30,000

Jeff S Jeff S

Complete Due 10/1/10

Labor • Yield Line A to 98% • Consolidate Depts. 1 & 4

+$40,000

+15,000

Anne J

Dirk N

From 90% - 93%

Open

Materials • Reneg. Steel Agmt, 13% red. • Ink LT subcontract agmt

+25,000

+30,000

Stan K

Craig W

On Track for 10/31/10

Complete

Utilities • Decrease wknd base load 13%

+8,000 Kelly L Due 10/12/10

Maintenance Cut Line A & B unplanned downtime 20%

+13,000 Dirk N Complete by 10/31

Every One of the 5 Things Must Have a Metric

Transportation

Maintenance Cost

Sales Commissions

Water Usage

Revenue

Direct Labor

Bad Debt expense

Product Mix

Raw Materials

Billable Hours

Cost of Quality

Natural Gas

Outsourced Operations

No Charge Work

Diesel Fuel TOOLING COST

Office Supplies

Waste Treatment

Travel Cost

Chemicals

Electricity

WHAT ARE YOUR 5 THINGS?

Measure 5 Things

E2 Do List

There’s no such thing as an online “take back”

Economy2 Rule #26

Matt Kirchner_______________________________________ From: Bob Smith, Customer Sent: Thursday, March 16, 2006 8:26 AM To: Matt Kirchner Cc: Subject: Quality Issues Matt, We added another one to the rash of quality issues the last several weeks. You guys really need to get your act together. Bob

Brian Jones________________________________________ From: Matt Kirchner Sent: Thursday, March 16, 2006 8:27 AM To: Brian Jones Cc: Subject: FW: Quality Issues I wish these guys would learn how to run their own business before they tried to tell us how to run ours. Give me a break! We should probably take a look at the complaints and respond though. Matt

Bob Smith_________________________________________ From: Matt Kirchner Sent: Thursday, March 16, 2006 8:27 AM To: Bob Smith, Customer Cc: Brian Jones Subject: RE: Quality Issues I wish these guys would learn how to run their own business before they tried to tell us how to run ours. Give me a break! We should probably take a look at the complaints and respond though. Matt

1.   Every email you send will be seen by everybody, every time

2.   Mentally blind-copy your mother on every email

E2 Do List

Business people are so bombarded by emails, instant

messaging, texting, voice mails, skyping, data, metrics and surfing that we miss the

forest for the trees

Economy2 Rule #54

What am I missing in my business that’s right in front of

my nose?

$50,000

#61

117!

Find The Opportunities Hiding Under your Nose

E2 Do List

“Consumers are switching off from what brands are saying

as a result of the constant bombardment of digital noise”

Economy2 Rule #20

“Your new customer is not a corporate entity. It’s an

independently minded, highly connected, always emotional

human being.”

Christoph Becker

What’s the Remedy? •  “Nice to Meet You” •  Nosh Contractor (Professor of Behavioral Sciences in the McCormick School of Engineering & Applied Science, the School of Communication and the Kellogg School of Management at Northwestern University

•  Single Largest Application for email is…….to set up face to face meetings

•  People on your Skype or IM List – at least ½ are people very close to you

•  You are 22.6 times more likely to be electronically connected with someone < 25 miles from you than you are someone > 25 miles from you

•  Have you made more than 3 contacts on LinkedIn in the last year?

Intimacy is the Gold of the future. Get close to your employees, suppliers and

customers

E2 Do List

The best time in the history of humankind to be in a sales

slump is…

Economy2 Rule #30

0%

20%

40%

60%

80%

100%

120%

140%

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Performance to Goal

0%

20%

40%

60%

80%

100%

120%

140%

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14

Performance to Goal

0%

20%

40%

60%

80%

100%

120%

140%

J F M A M J J A S O N D J F

Performance to Goal

The best time in the history of humankind to be in a sales

slump is…TODAY!

Economy2 Rule #30

Identify • Dbase • SN • Website • SEO

Research • SEC • Website • Lit • SN

Contact • Email • Text • Mobile • Desk

Present • PPT • Video • CAD • GTM • Website

Propose • CRM • Pdf •  Irrational

Pricing • Value Prop

Follow Up

• Email • Text • Mobile • Desk

Win

Use the Tools in the Exponential Economy to

Grow Sales

E2 Do List

We are so blasted by constant stimuli that we don’t take the time to keep our problems in

perspective and instead make them bigger than they really

are.

Economy2 Rule #34

•  Born October 5, 1943 •  Born In Milwaukee, WI •  Les Paul was a regular visitor at my childhood home •  I attended UW Madison •  I formed a band in 1967 and named it after myself •  I am a “Joker” •  I flew Like an Eagle…. •  On a “Jet Airliner” •  I Took the Money & Ran •  Jungle Love •  Rock’n Me

Who Am I?

Perspective

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35

Succ

ess

Career Years

-2

-1

0

1

2

3

4

5

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35

Succ

ess

Career Years

Paul Harvey’s Lessons for Kids

Keep it in Perspective, Things aren’t always as they

seem.

E2 Do List

In an Exponential Economy we have access to more data than we need. It's not enough just to use this data to see where we've been, we need to use it

to see where we're going.

Economy2 Rule #29

Predictive Analytics

Using “predictive models to exploit patterns found in historical and transactional data to identify risks and

opportunities”

Using the vast amounts of data we already have to predict possible future occurrences and then adapt

our future strategy to the prediction

We can use Predictive Analytics to foresee all kinds of things

•  Which Customer May Defect? •  Inventory Requirements •  What Offers will Appeal to Customers? •  What Price will They Pay? •  Which Candidate will be a High Performer? •  Employee Attrition •  Which Products or Services lead to Higher Margins when

Bundled?

It’s not just for Huge Companies

Most Profitable

Customers Kaizen

Learn More……….

Google “Harvard Business Review Thomas Davenport”

http://blogs.hbr.org/events/2011/10/predictive-analytics-gaining-a.html

Use Predictive Analytics to Get There before Your

Customers & Employees do

E2 Do List

“You Have to Be a Lifetime Learner” Tom Nelson, 2010

Economy2 Rule #39

The game was to know a little

about a lot of things, so you

could spot places where the big wave might be

coming.

Mallaby. (2010). More Money Than God. New York. The Penguin Press.

Politics / Regulation • Politico • NYT • The Hill • Drudge

Technology • Kurzweilai.net • Xconomy.com

Pop Culture • Music • TV

Business • WSJ • Forbes

1.  Be a Lifetime Learner

2.  Learn a little about a lot so you see the wave

E2 Do List

Business is moving so fast and the tools needed to succeed

becoming so complex that we can no longer do it all

ourselves.

Economy2 Rule #14

1:41:48 First Officer says “Wiper On”; Flight Engineer Turns On First Officer Says “Not in Sight” Warning System says 500 feet – No Runway

1:42:19 First Officer “let’s make a missed approach” 1:42:20 Flight Engineer “Not in sight” First Officer “Missed Approach” 1:42:22 Flight Engineer “Go Around” 1:42:23 Captain Repeats “Go Around” – but is slow to pull the plane

out of its descent 1:42:26

228 DEAD

•  20 Years before a Korean Air Boeing 707 wandered into Russian Airspace

•  2 Years later Korean Air Boeing 747 Crashed in Seoul – 2 accidents in 2 years

•  3 Years later list another 747 Near Sakhalin Island in Russia

•  707 went down over the Andaman Sea in 1987 •  Two more crashes in 1989 in Tripoli and Seoul. •  Another in 1994 in Cheju, South Korea.

Not The First Time

Loss Rate per Million Takeoffs

0.27

4.79

17 Times Higher!

•  Poor Weather •  Behind Schedule •  52% - Pilot Awake 12 Hours or More •  44% - Pilots Never Flown Together •  Then Errors Start - Average of 7 Consecutive Human Errors •  First Not a Problem, But Another, and Another, and

Another….. •  7 Errors - Rarely of Knowledge or Flying Skill •  Errors of TEAMWORK & COMMUNICATION •  One Pilot Knows Something but Doesn’t Tell •  One Pilot Makes Mistake and Other Doesn’t Catch it •  The Combination Leads to Disaster

The Typical Airline Crash

Why a Loss Rate Per Million Takeoffs 17

Times Higher?

PDI Power Distance Index

How Much Does a Typical Culture Respect Authority?

Are employees afraid to express disagreement with managers?

Do less powerful members expect that power is distributed unequally?

How much are older people respected and feared?

Are power holders entitled to special privileges?

PDI

The More the Flight Crew Respected Authority the

Less Likely the Aircraft was to Crash?

True or False?

False

•  Poor Weather •  Behind Schedule •  52% - Pilot Awake 12 Hours or More •  44% - Pilots Never Flown Together •  Then Errors Start - Average of 7 Consecutive Human Errors •  First Not a Problem, But Another, and Another, and

Another….. •  7 Errors - Rarely of Knowledge or Flying Skill •  Errors of TEAMWORK & COMMUNICATION •  One Pilot Knows Something but Doesn’t Tell •  One Pilot Makes Mistake and Other Doesn’t Catch it •  The Combination Leads to Disaster

The Typical Airline Crash

High Power Distance

Index

Subordinates Reluctant to

Raise Concerns or

Criticize

Errors Go Unchecked

One Error Becomes 7

Disaster Strikes

How Much Does a Typical Culture Respect Authority?

Are employees afraid to express disagreement with managers?

Do less powerful members expect that power is distributed unequally?

How much are older people respected and feared?

Are power holders entitled to special privileges?

PDI

5 Lowest (pilots)

United States Ireland

South Africa Australia

New Zealand

5 Highest (pilots)

Brazil South Korea

Morocco Mexico

Philippines

High Power Distance Index

Subordinates Reluctant to

Raise Concerns or Criticize (or

Suggest Improvements)

Rate of Improvement

Stagnates Competitors Get The Edge

Business Problems

Occur

Businesses Aren’t Much Different

Study of 41 global companies found that those with highly engaged employees surpassed those with less engaged employees in both operating margin and net profit margin over a three-year period. Other Benefits •  Reduced absenteeism and turnover. •  Improved quality and safety. •  Product innovation.

International Survey Research

Business is Figuring it Out

FORTUNE ASKS: What’s the Key? DAY RESPONDS: “Trust Between Management

and Employees”

# Stores Since 2008: 71 to 174 Revenue Since 2008: $297 million to $1 billion Stock since 2007 IPO: Up 263%

LULULEMON ATHLETICA CEO CHRISTINE DAY

•  Let Staffers Actually Do their Jobs

•  Find the Magic Makers

•  Allow People to Own Their Mistakes

•  Take Charge in a Crisis

Our People Know Way More Than We Give Them Credit For - Recruit Winners, Let them Do Their Jobs and

Own their Mistakes

E2 Do List

We seemingly have everything we need to run our business on the screen of our

laptop, so we try to run our business from the screen of our laptop.

Economy2 Rule #28

Go To The GEMBA!

The Solution

5S

Andon

Bottleneck Analysis

Continuous Flow

Gemba (The Real Place)

Heijunka (Level

Scheduling)

PDCA (Plan, Do, Check,

Act)

Just-In-Time (JIT)

Kaizen (Continuous

Improvement)

Kanban (Pull

System)

Hoshin Kanri (Policy

Deployment)

KPI (Key Performance

Indicator)

Root Cause Analysis

Poka-Yoke (Error

Proofing)

Six Big Losses SINGLE MINUTE EXCHANGE OF

DIE (SMED)

Takt Time

Standardized Work

Value Stream Mapping

Total Productive

Maintenance (TPM)

Visual Factory

LEAN TOOLS

Gemba (現場, gemba?) is a Japanese term meaning "the real place." Japanese

detectives call the crime scene gemba, and Japanese TV reporters may refer to

themselves as reporting from gemba. In business, gemba refers to the place where

value is created; in manufacturing the gemba is the factory floor.

What is the GEMBA?

Me • Shareholders • Bank • Lawyers • Employee Issues

• Etc.

2 Vice Presidents & Office Staff

8 Direct Reports Line Leaders

People Who Actually Do the Work

Customers

q The Front Line Saw Me q I Saw the Front Line q Connected with My Metrics (5 Things) q Drove Change q Closer to Customer q Ready Answers for Bankers & Shareholders.

What Happened?

Go to the Gemba!

E2 Do List

Technology Has Made Our Memory Obsolete

Economy2 Rule #18

Trinity College Dublin

•  Fully a third of those under the age of 30 can’t even remember their own home land line number without pulling it up on their handsets.

•  30 percent of adults can’t remember the birthdays of more than 3 immediate family members.

Memory Keys

A System Practice

Don’t Forget to Remember

E2 Do List

The average adult born between 1957 and 1964 held ___ jobs

between the ages of 18 and 42

Economy2 Rule #50

4.3? 5.1? 2.4?

10.8? 7.6? 3.1?



Economy2 Rule #50

4.3? 2.4?

10.8? 7.6? 3.1?



Economy2 Rule #50

4.3? 2.4?

10.8? 7.6?



Economy2 Rule #50

4.3?

10.8? 7.6?



Economy2 Rule #50

4.3?

10.8?



Economy2 Rule #50

10.8?

The average adult born between 1957 and 1964 held 10.8 jobs


Economy2 Rule #50

Employee Career Changes

•  Quitting = Treason? •  Rely on Systems, not Memory •  Backup Plan for EVERY Associate •  Always Recruiting •  OIMF - Retention – Why do People Leave their Jobs?

Why do People Leave Their Jobs

1.  Unrecognized & Unappreciated 2.  Scarce Opportunities for Career

Advancement

3.  Overworked and Stressed out

4.  Lack of Coaching and Mentoring

5.  Better Compensation & Benefits

Push Pull Hug

Push, Pull, Hug and keep your people

E2 Do List

Is Technology Life?

Economy2

april 23, 2012 matt kirchner · present • ppt • video • cad • gtm • website propose •...

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